Mathematics of FinanceMCQMTP Dec 23 Series IQuestion 3943 of 512
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If the difference between C.I. and S.I on a certain sum of money at 5%\displaystyle 5\% p.a. for 2\displaystyle 2 years is 1.50\displaystyle 1.50. Find the sum of money

Options

A600\displaystyle 600
B500\displaystyle 500
C400\displaystyle 400
DNone of these
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Correct Answer

Option a600\displaystyle 600

All Options:

  • A600\displaystyle 600
  • B500\displaystyle 500
  • C400\displaystyle 400
  • DNone of these

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Detailed Solution & Explanation

Let the sum of money (principal) be P\displaystyle P. The rate of interest is r=5%\displaystyle r = 5\% p.a., so i=5100=0.05\displaystyle i = \frac{5}{100} = 0.05. The time period is t=2\displaystyle t = 2 years. The formula for the difference between Compound Interest (CI\displaystyle CI) and Simple Interest (SI\displaystyle SI) for a 2\displaystyle 2-year period is: CISI=P×i2CI - SI = P \times i^2 Given that the difference is Rs. 1.50\displaystyle \text{Rs. }1.50: 1.50=P×(0.05)21.50 = P \times (0.05)^2 1.50=P×0.00251.50 = P \times 0.0025 Solving for P\displaystyle P: P=1.500.0025=600P = \frac{1.50}{0.0025} = 600 Thus, the sum of money is Rs. 600\displaystyle \text{Rs. }600. Hence, **Option A** is the correct answer.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

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